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Language: en
Rising interest rates seems from my
perspective seems good because I can you
know take my money out of the stock
market or whatever and put it into T
bills and if T bills are kicking off 15%
like I'm laughing like that would be
amazing um except for when you look
across the entire economy people have so
much debt the government has so much
debt that when you try to service
something with a raising interest rate
it gets
gnarly really really fast think think
think about this so we have a $ 32.7
trillion national debt which is Rising
by trillions of dollars a year as of
today interest on the national debt is
now the third biggest line item in the
budget so number one is Medicare then
Social Security then interest on the
debt then National Defense we're
actually spending more to pay interest
on the money we borrowed than we're
spending on defense and of course I
think we're spending too much on defense
I think we should spend less but we're
spending more on interest but here is
the real problem that number keeps
growing a couple of years ago interest
on the national debt was 300 billion a
year now it's over 700 billion by the
end of the year it'll be a trillion by
the end of next year it'll be two
trillion what you know in three or four
in three or four years the US government
will be paying more in interest on the
national debt than it collects in taxes
so I mean this is impossible now the
only way around that imposs well because
the only way around that is if the FED
slashes interest rates but what if they
can't what if they have to keep rates
where they are the government must
default there is no way that it can
afford to make these payments because it
would have the FED would have to print
so much money to monetize that debt that
it would create so much inflation that
it would push interest rates even higher
because the more inflation there is the
less private sector demand there is for
government debt and but the more money
the FED Prince to prevent interest rates
from rising the more inflation they
create and the less attractive the
government debt becomes and now the FED
is the only buyer of treasuries but now
it's not just treasuries what about
Municipal debt what about all these
municipalities and states that loaded up
on debt what's going to happen when it
matures and they have to roll it over at
much higher rates what about all these
corporations that borrowed a bunch of
money to buy back their own stock what's
going to happen when that debt matures
and now they have to try to refinance it
and the rates have tripled or quadrupled
uh for them uh everybody is going to
collapse look the problem is we need
higher interest rates higher interest
rates is what is part of the Cure but
it's also what's going to what's going
to kill the current economy you you you
can't get rates from where they are now
to where they need to be without a
collapse it's like you can't make an
omelet without breaking eggs well we're
going to break a hell of a lot of eggs
because of how much debt we have why do
we have so much debt because we had 20
years of artificially low interest rates
of punishing people who saved and
rewarding people who borrowed and so the
whole economy is screwed up we we can't
unscramble this egg it's it you know
it's it's it's going to be bad but I
think that because it's going to be so
bad the FED is going to choose what it
perceives to be the lesser of the two
evils it will choose inflation over
collapse depression financial crisis
bankruptcy um that's why I'm convinced
that my portfolios are the correct
apprach roach you know just be in real
assets be out of the dollar be in
Precious Metals uh you know be prepared
to avoid the inflation tax because
that's the tax that's going to clobber
everybody what time period is this all
going to play out
over well I mean I look I mean I I I've
sounded the alarm in the past I thought
that you know the problem was was was
was more uh imminent in 2008 and n and
you know they pulled a few rabbits out
of the Hat I mean they we really uh
bought a lot of time you know when I was
you know warning about the financial
crisis back in 2002 and three you know
my first book uh crash proof how to
profit from the coming economic collapse
came out in uh February of 07 and so
when I was writing that book in fact
that book was initially going to be
something like uh the American Nightmare
it was going to be about real estate and
why real estate was going to crash and
all that but I didn't think that that
book had broad enough appeal so I made a
more you know a a broader book about the
economy in general and real estate was
you know a part of it uh there was a you
know chapter on the real estate bubble
and and how the government inflated it
um but back then I I thought that if we
did what I thought we were going to do
which we ended up doing I I I predicted
quantitative easing before they even
came up with the word right I knew what
they were going to do I just didn't know
what they were going to call it until
they they they did it but I I I I
wouldn't have thought back then and I
didn't think back then that we would be
here in 2023 and they would have been
able to run up the debt to 32 trillion
and they would have been able to keep
interest rates as low as they did for as
long as they did so that already
surprised me but because they succeeded
in doing that they just made the
problems that I was worried about back
then so much worse and so now I think
you know we're pretty much run out of
time I mean we're literally living on on
borrowed time so I mean I any day I mean
I I just think any day you go to sleep
you could wake up and it could be a
whole new world and and that's why you
know you got to be prepared I mean I you
know I I I I know that I'm not going to
wake up to to that disaster financially
I mean it's it could be bad you know
just as an American um but as an
investor I I think I'm prepared and I
think our fate will likely be sealed in
the foreign markets it's going to be our
creditors you know dur in the debt
sealing debate right and we keep saying
we got to raise the debt ceiling right
we have to raise the debt ceiling so we
can keep borrowing right and if we can't
keep borrowing we're going to default
which is you know which is an admission
right that uh we're running a Ponzi
scheme you know I used to joke you know
in fact that there's a you can see my
standup routine on YouTube If you Google
you know if you YouTube Peter shift
standup but I used to I used to tell
this joke I used to get a lot of laughs
but you know back in the Bernie madeof
days um when when Bernie made off you
know when they were first talking to him
the New York Times you know was did an
article and Bernie made off said look
you know the US government's running the
biggest Ponzi scheme ever I mean I'm I'm
a compared to the government right
and so people would say well who cares
what Bernie mid says right he doesn't he
doesn't have any credibility he's a
criminal now what I used to say back
then was well he's got credibility in
one area and that's Ponzi schemes right
he knows one when he sees one and if
Bernie mov says the US government is
running a Ponzi scheme he ought to know
and then I used to joke and I said you
know instead of putting him in jail we
should make him Secretary of the
Treasury because he would do a much
better job of the scheme because I
pointed out that you had secretaries of
the treasury like current Janny Yellen
she comes out and says hey if we don't
raise the debt ceiling we're going to
default that's an admission it's a Ponzi
scheme Janet Yellen didn't say if we
don't raise the debt ceiling we're going
to raise taxes so we can pay our bills
we're going to cut Social Security so we
can pay our bills no if we don't raise
the debt ceiling we're going to stop
paying our bills right that's why I
would get a laugh they say we have to
raise the debt ceiling so we pay our
bills or so America always pays its
bills no we need to raise a debt ceiling
to continue not paying our bills the
reason we have a stack of $32 trillion
of unpaid bills is because we don't pay
them we we go deeper into debt and so I
used to joke and I said you know it's
Ponzi 101 when you're running a Ponzi
scheme you keep it quiet you don't tell
the people that you're running a Ponzi
scheme so at least we could have bluffed
and pretended that no matter what we're
going to pay no we told everybody that
the only way America is going to pay its
bills is if we can find some other
sucker who will lend us the money and
that but the minute we run out of
suckers and we can't borrow well you're
s so that's basically what what what
they admitted uh so yeah I mean it's a
gigantic Ponzi scheme and I think the
FED is going to you know try to prevent
the government from defaulting by buying
those bonds and printing the money and
that and that means the the default
takes the form of depreciation of the
currency because the the debt is payable
right the one thing that you know for
sure is the government's not going to
pay its bills it's not going to pay the
debt the only question is how does it
default does it do it honestly by just
not paying or dishonestly through
inflation personally not paying default
would be much better I mean I would like
to see a complete restructuring of the
government where the government you know
cuts a lot of spending including uh the
debt I think we should basically try to
negotiate or you know maybe 50 cents on
the dollar 25 cents on the dollar doar
uh you know it's better to repay our
creditors less money than pay them in
full with inflated money where they end
up with even bigger losses but
unfortunately that's the path we're
going to go down because from a
political perspective nobody wants to to
to to do the truth now they just want to
kick the can down the road I mean you
don't want to diffuse the bomb before it
blows off you want to let it you know
before it blows up you want to let the
bomb explode and then point the fingers
and blame it on somebody else and say
that there's nothing we could have done
this no nobody could have predicted
this Peter what would your advice be to
the Youth of the Nation they're going to
inherit this mess um they are though
part of the human nature that makes this
problem do we need an era of
austerity um is it just what you're
saying restructure slash i' I heard you
give a talk where you were like there's
whatever 15 governmental units keep five
kill 10 and those aren't the exact
numbers but that was the spirit um yeah
what what is your letter to to the Youth
of the Nation well I think the youth are
actually in in better shape than let's
say My Generation I'm at the tail end of
the baby boom I'm I'm
60 but if I'm right that inflation is
How This
Ends it's a lot of older people who are
going to get wiped out if you're young
chances are you don't have a lot of
savings in fact you probably have no
savings whatsoever uh and and so you
know inflation is not going to affect
you in that way and you're still out
there working uh you can you can demand
a raise right you can you know you can
earn more money uh to cover the fact
that costs have gone up but if you're
older if you're retired if you're living
off Investments uh you get decimated you
know a lot of people say oh you know
we're leaving all this debt to our
grandkids the grandkids don't have to
pay it I mean they can leave I mean in
theory we'd have to raise taxes
massively on the younger generation to
pay off the debts of their parents and
grandparents but what if they just leave
you know when I ran for Senate I did
that you know once in in 2010 and
obviously I didn't get elected you know
saying the type of stuff I say right
it's difficult but I ran one time in uh
in 2010 but people used to ask me you
know where do you stand on a wall on
building a wall you know uh between
Mexico and the United States and I was
always against the wall and the main
reason I was against it is I said you
know if we Build That Wall it works both
ways right
it's not just that it keeps Mexicans out
but it can be used to keep the Americans
in that's what scares me because what if
we have to raise taxes so much on the
Young Generation to make the Social
Security payments and the Medicare
payments and all that that they want to
leave that they just say screw this I'm
not paying 50 60 70% income tax I'm
going I'm going to Mexico I'm going
someplace else you know I mean that's
what happens with countries when when
when people want to leave because the
governments are too big they make it
illegal to leave you know in order to
renounce your citizenship there was a
form that you had to fill out and that
form was free then they raised the price
of the form to like 500 bucks now it's
$5,000 you have to pay $5,000 if you
want to give up your citizenship now why
is the government making it more
expensive to give up your citizensh
because more people want to do it well
what if they what if they increase the
price to um a million dollars well I
mean they could I mean they can I mean
they're forcing people to stay that you
know obviously there's a reason for that
and because they can keep on taxing you
right because if you if you're a US
citizen and you live someplace else and
work and earn money you still owe taxes
to America you know that's not the case
with just about everybody else in the
world right we talked about the UK I
mean if you if you're if you're British
you're British passport and and you go
uh to let's say Dubai and you live and
work in Dubai they have no income tax in
Dubai you don't pay any taxes back to
Britain you live in Dubai you're still a
British citizen right you can go you
know but you don't pay any taxes to the
UK government if you're not in the UK
but if you're an American citizen and
you go to Dubai and you work right next
to that British guy and you have like
work for the same company have this you
know you're doing the same job you're
paying taxes to America even though
you're not in America right so we're
we're America is unique in that we tax
your income no matter where you are in
the world earning it um but yeah I mean
it's going to be be difficult to keep
the young people I mean they you know
obviously it's harder for the IRS to get
you if you're in another country and you
never come back but I think that um the
younger people are going to ultimately
get off the hook from the debt because
we're going to inflate it away but if we
don't do that if we try to tax them
they're just going to leave you know and
even if we build walls you know they'll
get under them they'll get over them I
mean it's you know it's a big country we
got two oceans you if they if they try
to force the Young people to stay it
ain't going to be easy but you know
that's one of the reasons that I oppose
you know the government getting more
power over us to to to Snoop on us and
know everything we're doing because if
people are ever at the point where they
want to flee the country I want them to
be able to do it I don't want the
government to be able to stop them I
don't want the US government to be able
to force people to stay here if they
want to leave I want people to be free
to go you know and in fact if the
government knows that people will leave
then that's going to keep them more
honest right if they know that they
people can escape the taxes by leaving
that then that's an incentive not to
raise them up too high if they think
that they've got the Border sealed and
everybody is captive well then they can
they can tax even
more Peter that is uh a
sobering uh answer to the Youth of
America you can still Escape boys and
girls don't
worry but but it's not just that it's
that it's that you know they don't have
a lifetime of savings that's going to
get get destroyed by inflation and I
don't think they're going to get stuck
with the debt again the debts going to
be inflated away and so it's almost like
a debt Jubilee we're kind of going to
start over but when the debt gets
inflated away one person's debt is
somebody else's asset right if somebody
owes money they owe it to somebody else
so somebody is a debtor and somebody is
a creditor so when inflation wipes out
debt it wipes out the Creditor as well
now who is the biggest debtor on the
planet Earth the US government in fact
we might be the biggest debtor in the
universe I mean I I I think it if we
could find life on another planet I
doubt there's a government on that
planet that has as much debt as the
United States I think you know but I
mean maybe I'm wrong but I doubt it but
so but the US government is the biggest
debtor and so the US government actually
has the most to gain from inflation
that's why it creates it right that's
that that the government wants inflation
they just don't want us to realize that
they're creating it and they don't want
it to get out of hand but it will get
out of hand right it's like you know you
you know it's like you let loose the
monster right it's like the government
is you know Dr Frankenstein and they
think they can control the Monster uh
but the monster is is going to is going
to end up beyond their control if you
like that clip check out the full
powerful episode here and I'll see you
there